This type of replacement requires a general string expression on the replacement side, and as far as I know, UltraEdit doesn't supply that with just the "Find/Replace With" interface. But you can write a script to do it:
UltraEdit.activeDocument.write(
UltraEdit.activeDocument.selection.replace(
/(\d+)\*(\S+)/g,
function(_, count, value) {
return new Array(count-0+1).join(value+' ').replace(/ $/,''); }
));